By Cyril Tuohy
Regulatory assets under management reported by investment advisors in April reached $61.7 trillion. This is an increase of 12.5 percent from the $54.8 trillion reported in the year-ago period, the Investment Adviser Association (IAA) and National Regulatory Services (NRS) announced.
Meanwhile, the number of Securities and Exchange Commission-registered investment advisors in April was 10,895, an increase of 3.4 percent from 10,533 a year earlier, the IAA and NRS also reported in the 14th annual Evolution/Revolution report of advisor filings.
The SEC-registered advisors employed more than 700,000 people and served nearly 28 million clients, the IAA/NRS report said.
Karen Barr, IAA general counsel, said the latest report revealed a “dynamic and diverse” advisory profession.
“The data reflects the increasing demand for investment advice on behalf of individual and institutional investors and the significant role that investment advisers play in the financial markets,” Barr said in a news release.
Last year’s booming stock market pushed the volume of assets under management to greater heights, but the distribution of advisors as measured by assets under management paints an uneven picture of the industry.
NRS Managing Director John Gebauer said the top 1 percent of advisors manage more than 52 percent of the total regulatory assets under management.
A nationwide advisory firm such as Merrill Lynch Wealth Management, which employs thousands of advisors, manages billions more in assets than a sole proprietor on Main Street with less than $1 million in assets under management.
Still, new advisors — small shops — join the ranks every year and small advisors make up the largest market segment by far, the report found.
In 2014, the report said, 57.1 percent of advisors reported having 10 or fewer full-time and part-time nonclerical employees, and 87.9 percent of advisors reported having fewer than 50 such employees.
Advisors with less than $1 billion in registered assets under management account for 71 percent of all SEC-registered advisors, but they manage only 3.5 percent of reported registered assets under management, the report found.
The research also found that 36.2 percent of all SEC -registered advisors reported managing at least one private fund.
National Regulatory Services tracks compliance and registration products and services for investment advisors, broker-dealers, hedge funds, and investment and insurance companies.
SEC-registered advisors make up only a fraction of the entire investment advisor universe, which the U.S. Department of Labor (DOL) defines as securities, commodities and financial services agents.
Using the DOL definition, there were 354,600 jobs fitting that description in 2012, a category which is expected to grow by 11 percent over the 10-year period ending in 2022.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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